Louisiana Senator Comments On The Suggestion That States File For Bankruptcy
MARY LOUISE KELLY, HOST:
Governors from across the country and across the political spectrum are balking today at an idea floated by Republican Senate Majority Leader Mitch McConnell, an idea on how states can deal with tough times ahead.
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MITCH MCCONNELL: I would certainly be in favor of allowing states to use the bankruptcy route. It's saved some cities, and there's no good reason for it not to be available.
KELLY: The bankruptcy route - well, that is McConnell talking to conservative talk show host Hugh Hewitt yesterday. And this idea that states should declare bankruptcy rather than rely on the federal government to help out, it does not sit well with New York Gov. Andrew Cuomo. Here he is at a press conference earlier today.
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ANDREW CUOMO: States should declare bankruptcy? That's how you're going to bring this national economy back - by states declaring bankruptcy? You want to see that market fall through the cellar? Let New York state declare bankruptcy.
KELLY: Joining us now is someone who wants money flowing from the federal government to states - Sen. Bill Cassidy, Republican of Louisiana. Sen. Cassidy, welcome.
BILL CASSIDY: Hey, Mary Louise. Thank you for having me.
KELLY: Your reaction to that tape we just heard from Sen. McConnell suggesting that bankruptcy should be on the table for states?
CASSIDY: I can't speak for Sen. McConnell, but I can speak for myself. If the reason a state would - or city would have to declare bankruptcy is because of a government-ordered economic shutdown because of coronavirus, then I think it's absolutely wrong. On the other hand, if a state wants to foist four decisions regarding its pension plan upon the federal taxpayer, well then, maybe that's where McConnell is going. I'm looking specifically at the economic loss caused by the coronavirus shutdown. If we don't have policemen, fire, sanitation, we're not going to have reopening of small business and employment of Americans that agree that the problems are caused by that issue. I'm for helping states, cities and citizens out.
KELLY: Although if Mitch McConnell were on the line with us - and he's most welcome if you're listening, Sen. McConnell - he might argue that the federal government should not be digging itself deeper into debt, a debt that future generations are going to inherit, to bail out states. Does he have a point?
CASSIDY: He has a point, but on the other hand, look at it this way. We have spent 500. We'll end up spending north of that to keep small businesses open - good for us because they're the ones who employ Americans, and we need to come out of this rough patch with Americans employed in the vital economy. I would argue small businesses cannot stay in business if you don't have police, fire, sanitation, et cetera.
CASSIDY: So it's part of the puzzle to keep small businesses employing Americans.
KELLY: Now, I should note this week you introduced a bill that would provide 500 billion in funding to state and local governments, which would seem to be a departure from - if not the exact opposite of - what Mitch McConnell is saying. Why do you think that's the way to go? Why should the Federal Government be sending money to states?
CASSIDY: We don't want to have a depression caused by economic dislocation from the coronavirus. We've been supporting individuals, families, small employers and large employers all for the sake of keeping Americans employed. But again, if you can't provide basic social services because the city has lost its sales tax revenue, its hotel tax revenue, its tourism revenue, well then, you're not going to be able to provide those basic services. And by the way, you're not going to have any visitors, either. So the kind of flow of dollars that stimulate economic activity will be lost. By the way, I am not in favor of bailing out a states pension plan. That's something different. I am in favor of helping people make up for lost revenue lost because of coronavirus.
KELLY: Does the spending worry you? We're approaching three trillion - trillion with a T - allocated by Congress since this crisis began. Does that number, three trillion - does it not worry you?
CASSIDY: Of course it worries me. But if you look at the Great Depression, that ended up making a bigger hit on government revenue than anything else. And there was a point during the Great Depression in which FDR pulled back, and we went back into a second depression. So until we kind of get out of this coronavirus, there is going to have to be right support for some small employers because we want that small employer to stay in business to continue to employ Americans.
KELLY: Yeah. I mean, this is a somewhat hypothetical debate because under current law, states can't declare bankruptcy. Cities, of course, can. Local governments can. Should that change? Do you think Chris (ph) Cuomo has a point when he says, you want to see the market collapse? Let New York or another state declare bankruptcy.
CASSIDY: I think it was Andrew that said that, but nonetheless...
KELLY: I'm sorry - Andrew Cuomo. Forgive me. I'm conflating the Cuomo brothers. Thank you for...
CASSIDY: Got it.
KELLY: ...Correcting me.
CASSIDY: I don't think the federal taxpayer should be on the hook for poor decisions made about pension plans. If the only way that a city - San Bernardino, for example, or Chicago - if they still have a - if San Bernadino still has a problem, if Chicago has a problem, if they declare bankruptcy, then maybe that should happen because, by golly, we - I don't think in Baton Rouge, La., or New Orleans or Shreveport, we should be bailing out pensions in Chicago. On the other hand, that is different than losing revenue because of a government-ordered shutdown over coronavirus. And if we replace that lost revenue, that, I think, would be appropriate.
KELLY: Democrats are working on a fourth relief bill right now. They say that will include funding for states and local governments. What would need to be in that package for you to vote on it?
CASSIDY: You would have to have some safeguards. For example, one thing I thought was wise - what we're doing for hospitals - because I saw one of your leading stories is about hospitals taking a hit - is we looked at the amount of money that health care providers were receiving over the same time period a year ago and what they received over this time period.
CASSIDY: Tried to make up a little bit of the difference keeping those nurses employed. Maybe we do the same thing for cities and localities - not bailing them out of their accumulated unfunded liability...
CASSIDY: ...But helping them to pay those police officers, et cetera.
KELLY: OK. That is Bill Cassidy, the senior senator from Louisiana. We will leave it there for now and look forward to continuing this conversation with you. Senator, thanks for your time.
CASSIDY: Thank you. Transcript provided by NPR, Copyright NPR.